US nuclear reactor project collapses

Construction work on two nuclear reactors in South Carolina has been halted due to cost overruns. The first new US plants to be built in two decades fell victim to the bankruptcy of Westinghouse earlier this year.

The board of US utility Santee Cooper said on Monday it had decided to end construction of two new reactors in South Carolina to save its customers an additional $8 billion plus $3.4 billion in interest that would still have to be spent on the project.

The company owns a 45 percent share of the project whose initial cost was put at around $11.5 billion. Cost overruns doubled, however, because of construction delays and safety requirements. Under the approved Santee Cooper resolution, all work will end within six months. How quickly within that timeframe workers at the site will lose their jobs is uncertain.

Second owners, South Carolina Electric & Gas (SCE&G), also said it unanimously voted to cease construction of the two power reactors, which were supposed to go online earlier this year, but are four years behind schedule.

In a statement, the company said: “Simply put, our evaluation showed that it would cost too much and take too long to complete construction on both units.” It added that an option to complete construction of one reactor would have been feasible, but was eliminated after Santee Cooper’s decision.

The two reactors were supposed to be the first new nuclear projects to come online in the US since 1996. Their cancellation means that only two nuclear plants are now in construction, in this case in Georgia, while there are about 100 up and running.

Lost money

The reactors were planned for the V.C. Summer Nuclear Station north of Columbia. Construction was launched in 2008 by US electrical engineering firm Westinghouse, which had been acquired in 2006 by Japan’s Toshiba. But Westinghouse filed for bankruptcy protection in March , plunging the project in doubt.

Environmental groups have called on state regulators to order SCE&G to refund customers at least some of the billions they’d paid upfront through rates that have increased yearly since 2009. A 2007 state law allows electric utilities to collect money from customers to finance a project before it generates power.

Construction now accounts for 18 percent of the electric bills of SCE&G’s residential customers. Santee Cooper has increased rates five times to pay for the escalating costs.

The Public Service Commission has set a hearing on the environmental group’s request for October, but it is unclear whether it can order the utility to refund customers and how much because this would require proof the utility gave regulators faulty information. The utilities announced last week that Westinghouse’s parent company, Toshiba, agreed to jointly pay them $2.2 billion regardless of whether the reactors are ever completed.

The United States is the world’s leading producer of nuclear energy but the sector accounts for less than 10 percent of total American energy production. Nuclear energy took a big hit with the accident at the Three Mile Island plant in Pennsylvania in 1979.